Periodically, the big candy makers try to get the FDA to relax the definition of "chocolate" to allow non-cacao fats into the mix. This could signal the beginning of another lobbying effort.
"Chocolate lovers read that as a direct assault on their palates. That's because the current FDA standard for chocolate says it must contain cacao fat -- a.k.a. cocoa butter -- and this proposal would make it possible to call something chocolate even if it had vegetable oil instead of that defining ingredient. Whoppers malted milk balls, for instance, do not have cocoa butter."
I don't have a "golden palette" but I think I can tell the difference. ("Dairy Milk" is gritty; Galaxy is either creamy or greasy (but my prefered cheap choc) and they have different mouthfeel).
Michel Cluizel is my prefered expensive chocolate, but that could just be because I like the box. I'm not sure I'd be able to tell the difference between that and other good chocolate if I was doing a blind taste test.
A more accurate title might be: "world's biggest chocolate-maker tries to prepare customers for higher prices by disingenuously claiming that we will run out of a renewable resource."
Also, most likely, "world's biggest chocolate-maker prepares ground for an other round of trying to bulk up chocolate with non-cocoa fats and still call it chocolate"
I distinctly remember how several years ago Mexico manufactured Tequila shortage by claiming that disastrous weather led to a shortage of agave fruit. At least this was a story given by Canadian liquor stores to questions why Tequila prices were hiked by close to 50% almost overnight. I kid you not. They also issued assurances that once this pesky Mexican weather normalizes the prices will go back to normal. You guessed it - they never did.
In that particular case, there was a shortage - it was extremely difficult for even large businesses to get hard drives. The issue was that hard drive manufacturers were (are?) clustered around an area that got flooded.
Or the shortage was caused by the NSA filling their new data-center with as much capacity as it could get its hands on, covertly, and the flood was used as a convenient cover-story for the shortage.
Consider that Theobroma cacao only grows well and healthy in the shade, in the middle of the rainforest, it's natural habitat, which is increasingly rare or protected land.
It's also grown by small scale farmers, because it's labour intensive, and they don't know/don't care about managing the forest properly, further increasing deforestation, and endangering the crop itself.
Today's practice is to grown it under sunlight, in poor soil, which requires large doses of herbicides and fertilizers, makes it susceptible to diseases and shortens the lifespan of the tree by 1/2.
On top of that, prices have been increasing for the past 10 years, but I've only seen the production go down here in Brazil. We went from exporter to importer. The invisible hand of the market is not fixing it either.
So you can't assume it's sustainable just because it's not oil.
In Brazil, there are huge problems with the mentionened fungus. The Bahian cocoa industry, once massive, is effectively dead. It's a sad story, really, seeing how it was spread on purpose to better the situation of the workers. And it's a story in caution since it would be really easy to do the same thing to the West African cocoa, no cure has been found yet and the tries so far have ruined the farmers in Bahia.
But well, my friends lost their farm anyway..
It's not like that's going to disappear. It may shift or even shrink, but the possibility of these plants going entirely extinct is roughly zero.
The article is written in a fantasy world where neither supply nor demand can be altered. Amusingly, while discussing the problem (farmers are switching to more profitable crops) it also discusses the automatic solution (decreased supply will increase prices which will decrease consumption and increase production).
The purchase was enough to move the entire global cocoa market, sending the price to the highest level since 1977, and triggering rumours and intrigue in the City.
It is unclear which person, or group of traders, was behind the deal, but it was the largest single cocoa trade for 14 years.
The cocoa beans, which are sitting in warehouses either in The Netherlands, Hamburg, or closer to home in London, Liverpool or Humberside is equivalent to the entire supply of the commodity in Europe, and would fill more than five Titanics. They are worth £658 million.
"Last year, the world ate roughly 70,000 metric tons more cocoa than it produced. By 2020, the two chocolate-makers warn that that number could swell to 1 million metric tons, a more than 14-fold increase; by 2030, they think the deficit could reach 2 million metric tons."
How can the world be eating more cocoa than it produces? I can imagine there might be stockpiles, but surely they're gone if we're talking about year-over-year deficits.
I think the article means that the demand for chocolate in 2020 could be 1 million metric tons more than supply. So prices will go up, and there will be an economic incentive for suppliers to increase production and for manufacturers to innovate with new products and efficiencies. Seems pretty normal.
To be pedantic: if you're going to be all Economics about it, you can't say the world demands 2 million metric tons, because demand is a function of price. If the price goes up the quantity actually demanded will go down...
Oh don't worry they're already "innovating", though those filthy stinking regulations get in the way and stops them from innovatively selling cocoa-flavored vegetable oil as chocolate.
Chocolate becomes more expensive, more farmers start farming cocoa beans, prices go down, armchair economists make more wild predictions in the opposite direction.
I wonder how Ebola will affect production since it's in the region where chocolate is produced.
Isn't it weird chocolate native to South America is grown mainly in African countries and coffee native to South American is mainily grown in South America.
"Liberal," like fairness, means different things to different people. In America, where this forum is based, it means significant government involvement. But I could have been less ambiguous.
Yes, it's quite an unfortunate terminological collision. American "liberals" tend to dismiss the power of the market. This is quite a different attitude than that denoted by "liberal" in the context of economics.
I think it would be more correct to say that American liberals tend to dismiss the power of the market to produce the optimal result across all concerns not just GDP. Markets do a poor job at things like protecting the environment, and egalitarianism. Also, markets in practice tend to obstruct the sharing of information that is needed by theoretically ideal markets. Also, as capital accumulates free markets tend towards forming monopolies.
That's exactly what the market will do. The world isn't going to run out of chocolate, the only thing that might happen is the price goes up, then a lot more cocoa gets planted or less people are able to afford it.
Chocolate running out headlines have existed probably as long as newspapers and mass consumer chocolate.
With diseases, world might actually run out of chocolate or at least some varieties of it. Like Panama disease wiped out Gros Michel banana and is now also threatening Cavendish banana. Similarly Frosty Pod Rot seems to be spreading and threatening cocoa plantations.
If the very existence of chocolate were actually threatened, the resources that will be made available to save it would be almost incomprehensible. People really like the stuff, and there is no real substitute.
Bananas aren't that big of a deal for most people, especially if you're looking at going from two popular varieties to one. If the Cavendish gets wiped out too, I'd say that would just be due to people not caring all that much about bananas. I can't imagine the same happening for chocolate.
Actually bananas are a huge deal since they provide the basic nutrition for large populations in many parts of the world. Also Cavendish is the dominant set of varieties world over and there are not many real substitutes for it, yet.
They could grow something else to eat, at least in theory, right? A realistic extinction event should leave plenty of time to switch to another crop.
If bananas went extinct (while people dependent on them were able to switch to some other food), I'd basically just shrug and get on with life. If chocolate went extinct I'd consider it a colossal disaster. I suspect I'm not alone.
I understand that there are a lot of people who care about chocolate and who don't care about banana. I know plenty in the other direction (majority around me).
But there are two points. First is that you are underestimating the kind of role a crop can play in a culture. It is not just a matter of replacing Banana with another crop. It is a matter of changing significant cultural traditions going back hundreds of years. If you think about it, the importance of chocolate is also largely cultural.
Second, it is a philosophical debate that what is more important - something that is basic nutrition for one group or something that is cultural/emotional/luxury/(I can't find the right word for the role chocolate plays) for another. Where the resources will be allocated will depend on who controls those resources and which camp they fall in.
That would be an interesting article, this one however was kinda pointless, as it appeared to be predicated on prices not rising, with only a tiny call out to frosty pod.
Or the market will simply move off of cacao into some other source that's cheaper to source. They'll just change the name to something exotic sounding that doesn't violate regulations on chocolate content "mocha" or "xokolatle" or something that some marketing firm will invent after spending tens of millions of dollars on a branding consultancy.
Weak attempt at being funny. In fact, just about every grocery store in America has actual chocolate for sale. The US consumes immense amounts of all types.
Quite accurate attempt at being funny, I'd say. In fact, of course actual chocolate is available in America, but most of the chocolate consumed there has such a low purity that it wouldn't even be legal to call it chocolate in other countries.
In fact, the article itself mentions 10% cocoa content as being typical for milk chocolate. In Europe, the minimum required by law for milk chocolate is 25%.
This kind of thing is why I wouldn't like TTIP to be ratified...
Quoting[0]: "In the UK, chocolate must contain at least 20% cocoa solids. In the US, on the other hand, cocoa solids need only make up 10%. A Cadbury Dairy Milk bar contains 23% cocoa solids, whereas a Hershey bar contains just 11%."
So both pretty close to the minimums. As a Brit, I personally don't like Cadbury Dairy Milk, far too coarse and sweet. When it comes to milk, I prefer the creamier and smoother brands. But then, to me chocolate isn't an everyday or even regular thing at all.
When you look at dark chocolate you're looking at anything from 70 to 99%. When you get to about 85%, chocolate becomes a completely different experience.
> When you look at dark chocolate you're looking at anything from 70 to 99%.
Not that I disagree qualitatively (quite the opposite), but legally neither the EU nor the FDA have any such category, their highest categories are at 35% cocoa (respectively "chocolate" and "bittersweet chocolate")
Yeah I should have said "up to" 70 - 99%. The 70% stuff from Lindt is somewhere around my preference level. Funny you should mention 35%... Bournville (famous UK brand, now owned by Cadbury Kraft) is 36%. I still find it far too sweet.
> The 70% stuff from Lindt is somewhere around my preference level.
My jam's the 99% these days, although I often have to fall back on the 85% when my 99% stash is empty and I haven't found a refill yet (not every place around here sells 99%, but 85% and under is easy to get).
It's handy that most people can't eat 99% too (because they try to eat it like 60% or milk chocolate and that's not a very good idea), nobody raiding your stash.
Chocolate in the US does rather odd if you are not used to it - apparently this is due to a fondness there for the taste of a small amount of butyric acid in milk chocolate.
Of course, for their part, Europeans -- especially the Dutch, Finns and all of Scandinavia -- are very fond of ammonium chloride, used to make salty liquorice (often called salmiakki), which Americans generally seem to detest. What people grow up with matters a lot to what they find palatable.
The joke is that Americans only eat cocoa flavored sugar, such as is produced by the big commercial candy factories here. The GP pointed out that at any American store will sell you fine, refined chocolates, including (by implication)i mports from Europe, Asia, and South America.
This. I adore Cadbury's for example, but apparently Hershey's has a right to that brand in the US, and you have to go to an international store and pay an arm and a leg to get a genuine Cadbury chocolate.
Not to rain on your parade, but as someone who grew up near Switzerland, thats where the good stuff comes from. Cadbury is decent though.
On a related note, I have always wondered why food quality is so different by region. For example, these are some categories where the good variety is hard to get in other countries:
- belgian beer
- swiss chocolate
- italian mozzarella
In this day and age where goods are shipped for almost nothing around the world, why do they still manage to sell inferior products without having a foreign competitor out-competing them with the better product? Is the foods market simply too price sensitive? Barriers to market entry too high?
But if your choice is limited, Cadbury's is not so bad. When I lived in Australia, the number of chocolate that I choose form is abysmal. There were offerings from Nestle, Cadbury's and some local offerings. The European chocolate like Lindt are quite expensive and are treated as luxury items.
This reminds me of the weird hostile takeover of cadburys by kraft where they purchased 90% of the worlds chocolate for delivery (not option, for actual delivery).
Do you have a link? It sounds interesting, but I think you might be confusing the Porsche short-squeeze of Volkswagen stock [1]. I'm thinking that if Kraft bought 90% of the world's chocolate, Hershey would also be in trouble. Besides, I would assume that these companies have delivery contracts already in place for several years.
According to everything I found, what happened was that Kraft's price was too low and they did not want to be part of Kraft's low-growth conglomerate strategy. Once they discovered Kraft was actually planning on abandoning that strategy, they they polled shareholders about what price they would be willing to accept, and Kraft offered slightly more than that. [2]
I tried finding a link. The best I could find was a cocoa shortage in 2009 leading to a price surge, little talk of the cause.
I remember the article clearly. The cocoa was for delivery and the trades were done anonymously (as anonymously as possible) and that"s what made the article stand out. Then a few weeks or months later the talk of the kraft purchase.
Of course, 90% of the worlds chocolate was most likely for contracts that month and not the full year, which I guess is what's making the article so hard to find!
Why? Increased supply doesn't guarantee lower prices...witness your average gas price up/down movement. Even a whiff of increased usage or decreased production drives prices up within a day. But it takes a global glut to bring them down over a period of years.
Increased supply facilitates competition which drives prices down. If you artificially inflate prices, you leave room for competitors to seize market share without taking losses.
Generally that's true, but there are cases where it isn't.
Suppose you increase prices at a rate exceeding that which decreasing supply would demand, in collusion with other suppliers. You use the proceeds to increase wages.
Some point in the future, supply increases back to normalized levels, but now the cost of supply has also increased (because you pay people more), so the wholesale prices remain increased. Prices can only drop back to levels of the new cost floor, or the cost floor has to be moved down somehow -- in this case reducing wages.
We see a similar effect in oil markets because the cost of oil production has gone up as easy-to-exploit sources have dried up and more expensive sources have had to come on-line to meet demand. Production has actually increased but prices have stayed relatively high. This includes massive new production outside of OPEC cartel control, so even cartel price fixing doesn't account for it. Even more important, in a major market like the U.S., the distribution costs have dropped as a share of wholesale prices as domestic supply has come on-line.
Consumers have simply gotten used to the higher prices so there's reduced pressure to lower them competitively in order to ensure sufficient demand to move target inventory volume.
There's also other factors than pure supply/demand. Product differentiation can build in higher prices through perceived value (or other factors) in consumer's minds. Suppose over the next 10 years, the U.S. chocolate industry creates a marketing term "Savanna Chocolate" and starts rebranding all products by percentage of "Savanna Chocolate" they contain. "Now with 5% Savanna Chocolate!", supplemented with a marketing campaign to push all products as "Savanna Chocolate". The term is meaningless. However, it allows them to charge a 10% premium on product which helps guarantee higher prices.
Because Savanna Chocolate is not a thing, there's nothing to compete against, it's also trademarked. A competitor can't simply start selling their cheaper "6% Savanna Chocolate" competitor because they'll be sued into oblivion, if they wish to use the term, they'll probably just be charged a license fee large enough to ensure price compliance. All they can do is start an information campaign to try to persuade the public that Savanna Chocolate doesn't exist. These don't necessarily translate into higher demand for a competitor's product, and may in fact deflate the entire industry.
tl;dr - pricing is hard, simple supple-demand models don't describe it very well.
Chocolate isn't, so far as I can tell, controlled by a cartel. It would be difficult to do that, because it's an agricultural commodity. It's hard† to organize every farmer around the world that can manage a grove of cacao trees, and --- unsurprisingly given the history of the product --- processing cacao into chocolate liquor doesn't require specialized technology.
Meanwhile, the branding effect you talk about seems to cut against your argument. If consumers are conditioned to seek out boutique chocolate, the barriers to entry into the chocolate market are lowered: large suppliers like Hersheys and Callebaut can't use their brand power to lock consumers in which harvesting their economies of scale.
Long story short: I think the 1-2-3-4 story you told upthread isn't very plausible. If chocolate prices rise and stay there, my guess is that's where they belong. If they didn't, one of the dozens upon dozens of boutique suppliers already vying for shelf space at Whole Foods and Safeway and Costco would sacrifice a little surplus profit to make a play for some of Callebaut's market share.
† Sugar is an exception, but there are extrinsic reasons for the market dynamics of sugar --- trade policy and subsidies being two big ones --- that are absent from cacao.
We'll see what ends up happening. My guess is that we'll see a number of market factors combine to sustain higher prices at the cash register, even if cacao prices fluctuate down.
I think "repeal economics" occurs at step 2.5, unless somehow customers can be forced to buy even more at the higher prices than they'd ordinarily want to. Step 3.5 is just sound business once you've got the customer base taken care of. :)
(Prices would have to fall if production increased even if there were a single end-to-end monopolist chocolate seller, because the consumers wouldn't want to buy the extra chocolate at the higher price.)
See a 2007 proposal here: http://www.washingtonpost.com/wp-dyn/content/article/2007/04...
"Chocolate lovers read that as a direct assault on their palates. That's because the current FDA standard for chocolate says it must contain cacao fat -- a.k.a. cocoa butter -- and this proposal would make it possible to call something chocolate even if it had vegetable oil instead of that defining ingredient. Whoppers malted milk balls, for instance, do not have cocoa butter."